European industry dives, Japan deflation looms

LONDON/TOKYO. February 13. KAZINFORM Euro zone industrial output suffered a record plunge and Spain reported on Thursday its worst economic contraction in 15 years, heralding dire GDP data expected tomorrow from Europe's biggest nations.

Japan highlighted the risk of damaging deflation and only China -- whose companies are seeking bargains from heavily-indebted western firms -- offered any hope with a big rise in bank lending. Policymakers around the globe are fighting to prevent their economies, great and small, from diving deeper into crisis. In the United States, Congress is poised to pass as early as Thursday a $789 billion package of tax cuts and spending programs aimed at reviving the staggering economy. At the other end of the scale Ireland -- one of Europe's smallest but most troubled economies -- beefed up a bailout for its banks with a $9 billion capital injection for its top two lenders just as another scandal hit the sector. Erkki Liikanen, a policymaker at the European Central Bank (ECB), warned people to expect more bad news. "The economic crisis seems to be lasting longer and spreading," he said in remarks published on Thursday; Kazinform cites Today's Zaman. Euro zone industrial production proved his point, plunging a record 12 percent year-on-year in December, the EU statistics office Eurostat reported on Thursday.